ARM Debt Purchasing Company Case Study


What’s the problem: How to accurately value a business and successfully execute an exit plan, when timing and valuation are appropriate.

Summary: What started as a valuation report of a debt purchaser on behalf of their bank lender led to a 10-year saga and one of the most involved special situations transactions in Corporate Advisory Solutions history.

Originally retained in July of 2013, CAS issued a report on selected accounts of a debt portfolio on behalf of a leading financial institution lender to the company. From there CAS was engaged to update the valuation report and provide ongoing valuation assessments of the inventory and subsequent portfolio purchases in FY 2015, FY 2016, and FY 2017. As a result of conflict and disagreement between the company management and the bank lender, in July 2018, CAS was officially retained by the bank group syndicate (typically 10+ stakeholders) to begin strategic advisory work to provide more interim valuations, market intelligence as well as perform an exit prep assessment.

Over the next 5 years, until May of 2023, CAS:
– Spent a collective 1,500+ hours working on the engagement
– Logged over 300 unique days to the project
– Created and presented over 75 reports including monthly cash flow updates, ERC valuations, Recovery Analysis estimates, legal strategy updates, onsite review and findings, market updates, operational reviews and other related analysis
– Assessed and interviewed management, vendors and master servicers and suggested suitable replacements, where applicable

The continuous insights from CAS led the bank syndicate to forego a sale in 2019 and with the help of CAS, turnover the assets into a special purpose entity and retain a master servicer to assume oversight of the assets. The operational direction of the business post-turnover was augmented by CAS’ insights, including the implementation of a comprehensive pre-legal and legal strategy enacted to boost interim cash flow and preserve long-term value of the portfolio among other operational improvements. The strategic efforts were ongoing for a multi-year period, while CAS tested the market and communicated with our universe of buyer prospects to test their appetite for the platform.

This period of advisory work coincided with unique macroeconomic periods for the economy and debt purchasing industry including COVID lockdowns, stimulus packages and an unprecedented technology adoption with the ARM vertical. CAS’ advisory work led to an eventual sale of the platform in various tranches after evaluating market conditions and to maximize the value of the portfolio.

CAS ultimately acted as an exclusive sell-side advisor in December 2019 and again in March/April 2023. CAS was involved in buyer identification, outreach, preparation of marketing materials, secure data sharing as well as negotiations and assistance throughout the closing process. Given the number of stakeholders involved, CAS produced numerous presentations to summarize findings and updates along with CAS’ recommendations. We were able to remain nimble and moved swiftly to capitalize on interested parties in multiple tranches when timing was appropriate, which led to a successful exit for the bank group syndicate, netting them a value that exceeded the original sale estimates as compared to the original turnover in May 2019.

How’d we solve the problem: After years of valuation and forecasting reports, CAS underwent intensive strategic advisory services to position the business for sale and maximize interim cash flow until timing was appropriate to ultimately divest the assets to multiple buyers who maximized value for the

Services rendered: Market Valuations, Market Intelligence & Market Trend Analysis, Reporting and Analysis, Strategic Advisory, Buyer Solicitation and Identification, Sell-side M&A assistance, Secure Server Hosting, Distressed Asset Sales, Financial Performance Reviews, Executive Recruitment & Vendor

Share This Article

Related Articles

CAS Competitive Advantage

We prioritize honesty, open communication, and collaboration with clients. Interested in learning more about our approach?